DoD's $28.5M Jet Fuel Contract Awarded to Atlantic Aviation Raises Questions on Value and Competition
Contract Overview
Contract Amount: $28,486,022 ($28.5M)
Contractor: Atlantic Aviation Oklahoma City Inc.
Awarding Agency: Department of Defense
Start Date: 2015-07-01
End Date: 2019-03-31
Contract Duration: 1,369 days
Daily Burn Rate: $20.8K/day
Competition Type: FULL AND OPEN COMPETITION
Number of Offers Received: 131
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT
Sector: Energy
Official Description: JET A W/FSII JET A W/O FSII
Place of Performance
Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73159, UNITED STATES OF AMERICA
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $28.5 million to ATLANTIC AVIATION OKLAHOMA CITY INC. for work described as: JET A W/FSII JET A W/O FSII Key points: 1. The contract awarded to Atlantic Aviation for jet fuel represents a significant expenditure within the Defense Logistics Agency. 2. Analysis of the contract's pricing and competition method is crucial to ensure taxpayer value. 3. Potential risks include price volatility and the impact of the chosen competition strategy on overall cost-effectiveness. 4. The sector involves critical fuel supply for military operations, highlighting the importance of efficient procurement.
Value Assessment
Rating: fair
The fixed-price contract with economic price adjustment for jet fuel makes direct per-unit cost comparison difficult without detailed fuel market data. The awarded amount of $28.5 million over 1369 days suggests a substantial volume, but the specific unit price needs further scrutiny against market benchmarks.
Cost Per Unit: N/A
Competition Analysis
Competition Level: full-and-open
The contract was awarded under full and open competition, which is generally positive for price discovery. However, the effectiveness of this competition in achieving the best possible price for jet fuel, especially with economic price adjustments, warrants further investigation.
Taxpayer Impact: The use of full and open competition aims to secure competitive pricing, but the economic price adjustment clause could potentially increase taxpayer costs if fuel prices rise significantly.
Public Impact
Ensures availability of critical jet fuel for Department of Defense operations. Potential for price fluctuations impacting the final cost to taxpayers. Supports aviation infrastructure and related services at the awarded location. The contract duration and value indicate a significant commitment of federal funds.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Economic price adjustment clause may lead to cost overruns.
- Lack of specific per-unit cost benchmark for comparison.
- Potential for market volatility impacting fuel prices.
Positive Signals
- Awarded under full and open competition.
- Ensures supply of essential aviation fuel.
Sector Analysis
This contract falls within the energy sector, specifically focusing on the procurement of aviation fuel for military use. Benchmarks for fuel procurement can vary widely based on market conditions, geopolitical factors, and specific fuel types (with or without FSII).
Small Business Impact
The provided data does not indicate whether small businesses were involved in this contract, either as prime contractors or subcontractors. Further investigation would be needed to assess small business participation.
Oversight & Accountability
Oversight of this contract would involve monitoring fuel price adjustments against market indices and ensuring compliance with contract terms. The Defense Contract Audit Agency (DCAA) or similar bodies would likely be involved in auditing expenditures.
Related Government Programs
- Petroleum Refineries
- Department of Defense Contracting
- Defense Logistics Agency Programs
Risk Flags
- Economic Price Adjustment (EPA) clause risk
- Lack of specific unit cost benchmark
- Potential for market price volatility
- Limited insight into small business participation
Tags
petroleum-refineries, department-of-defense, ok, do, 10m-plus
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $28.5 million to ATLANTIC AVIATION OKLAHOMA CITY INC.. JET A W/FSII JET A W/O FSII
Who is the contractor on this award?
The obligated recipient is ATLANTIC AVIATION OKLAHOMA CITY INC..
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Logistics Agency).
What is the total obligated amount?
The obligated amount is $28.5 million.
What is the period of performance?
Start: 2015-07-01. End: 2019-03-31.
What was the average per-unit cost of JET A fuel during the contract period, and how did it compare to market benchmarks?
Determining the precise average per-unit cost requires access to the specific price adjustment data tied to the economic price adjustment clause. Without this, a direct comparison to market benchmarks is challenging. However, the contract's total value and duration suggest a significant volume, and any deviation from established market indices for jet fuel during 2015-2019 would indicate potential overpayment or savings for the government.
How effectively did the 'full and open competition' process ensure competitive pricing given the economic price adjustment clause?
While 'full and open competition' is a strong starting point for price discovery, the economic price adjustment (EPA) clause introduces a variable that can mitigate initial competitive gains. The effectiveness hinges on how well the EPA formula tracks actual market price fluctuations and whether the initial base price was set competitively. If the EPA formula is overly generous or market prices surged unexpectedly, the initial competition's benefit might be diminished.
What is the potential taxpayer impact if jet fuel prices experienced significant upward trends during the contract's duration?
The taxpayer impact could be substantial if jet fuel prices rose sharply during the contract's term due to the economic price adjustment clause. This clause allows for price increases based on specified indices, meaning the government would pay more than the initially fixed price. The total additional cost would depend on the magnitude of the price increases and the volume of fuel purchased.
Industry Classification
NAICS: Manufacturing › Petroleum and Coal Products Manufacturing › Petroleum Refineries
Product/Service Code: FUELS, LUBRICANTS, OILS, WAXES
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
Solicitation ID: SP060014R0221
Offers Received: 131
Pricing Type: FIXED PRICE WITH ECONOMIC PRICE ADJUSTMENT (K)
Evaluated Preference: NONE
Contractor Details
Address: 6401 S PORTLAND AVE, OKLAHOMA CITY, OK, 73159
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $28,486,022
Exercised Options: $28,486,022
Current Obligation: $28,486,022
Contract Characteristics
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: SP060015D0105
IDV Type: IDC
Timeline
Start Date: 2015-07-01
Current End Date: 2019-03-31
Potential End Date: 2019-03-31 00:00:00
Last Modified: 2015-06-29
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